Dell Seeks New Technology Chief in Hunt for Innovation Prowess

Feb. 29 (Bloomberg) -- Dell Inc. is seeking to hire a chief
technology officer for its business-computing divisions, aiming
to shore up the company’s technical credentials and expand in
higher-margin markets for data storage and corporate software.

Lonergan Partners, a recruiting firm in Redwood City,
California, confirmed that it’s handling the search, without
elaborating on potential candidates. Three people with direct
knowledge of the effort say Dell is looking for someone to shape
its data-center product strategy and serve as a public face for
customers and the press.

Chief Executive Officer Michael Dell is personally involved
in the search, which has come down to four candidates and could
be completed in the next two weeks, said Mark Lonergan, the
founder and managing partner of the recruiting firm. Dell is
under pressure to craft more technologically sophisticated
products that can help it compete with Hewlett-Packard Co. and
International Business Machines Corp.

“You have a massive American company that made its
reputation dealing with consumers,” Lonergan said in an
interview. “For the first time in a long time these guys are
beginning to create an authentic challenge to HP and IBM and
spread their wings.”

Michael Dell, who founded the company in his dorm room in
1984, is taking steps to lessen its reliance on desktop and
laptop PCs, which make up most of its sales. Hiring a technology
chief would help it challenge Hewlett-Packard and IBM by setting
technical direction and promoting Dell’s products. The company
hasn’t had a CTO in more than three years, and the new job would
expand on the duties of the position.

Silicon Valley Footprint

Dell, based in Round Rock, Texas, is already boosting
research-and-development spending and trying to raise its
profile in Silicon Valley. That includes opening a new office in
Santa Clara, California, last year.

David Frink, a spokesman for the company, declined to
comment on any recruiting or hiring efforts.

Dell, once the world’s No. 1 PC maker, lost that crown to
Hewlett-Packard in 2006. More recently, Apple’s Macbook laptops
and iPad tablets have cut into the company’s PC sales. Chinese
computer maker Lenovo Group Ltd. is now the world’s second-largest supplier, pushing Dell into third place. The company
also has struggled to produce a successful tablet computer or
smartphone.

A new technology chief for Dell’s so-called enterprise
products -- the servers, data storage, networking gear and
software that run companies’ operations and websites -- would
fill a position that has been vacant since CTO Kevin Kettler
left more than three years ago. In the interim, Dell has had an
“office of the CTO,” with no single person in charge.

Relying on Partners

During his tenure, Kettler would hold presentations for the
CEO and other top managers several times a year to keep them
abreast of technical developments from Intel Corp. and software
suppliers, said a person who attended the meetings. The
briefings weren’t a forum for discussing Dell technology because
the company relied on partners for most of its innovation,
according to the person, who declined to be named because the
information isn’t public.

The new CTO would be tasked with changing the company’s
culture to emphasize its own engineering, said an executive
who’d been contacted by a recruiter about the position. Dell has
interviewed candidates from companies such as EMC Corp., Oracle
Corp. and NetApp Inc., said another person with knowledge of the
search.

‘Transform the Company’

“We’ve been on a mission at Dell the last few years to
transform the company,” Michael Dell said this week at an event
in San Francisco to unveil new servers and other products.
“We’re investing at all-time high levels in research and
development.”

Dell spent 1.5 percent of revenue on R&D in the fiscal
fourth quarter, which ended Feb. 3, up from 1.1 percent a year
earlier. The level is still lower than that of rivals: Hewlett-Packard devoted 2.6 percent of sales to R&D last quarter, while
IBM spent 5.3 percent. Dell’s revenue rose 1 percent to $62.1
billion last year.

Acquisitions are broadening Dell’s product line. The
company purchased storage maker Compellent Technologies Inc.
last year, making it less dependent on reselling products from
EMC. It also bought Force 10 Networks Inc., providing it with
more networking gear. That curbed its dependence on Brocade
Communications Systems Inc. and Juniper Networks Inc.

Spotlighting Dell’s new innovation ability is going to be a
big part of the new CTO job, Lonergan said. His firm also
recruited former CA Inc. CEO John Swainson to head a new
software group at Dell earlier this month.

“Whoever ends up in the CTO role will be a tremendous
business person,” he said.